Ben's answer
Can I Still Get the 179D Deduction in 2026?
Yes, but only for property whose construction begins on or before June 30, 2026. Public Law 119-21 ends the section 179D energy-efficient commercial buildings deduction for property whose construction begins after that date. Projects that begin construction by June 30, 2026 can still qualify when placed in service if they meet the remaining energy-savings, certification, and Form 7205 rules.
- $0.59For tax years beginning in 2026, the IRS lists a base maximum of $0.59 to $1.19 per square foot, or $2.97 to $5.94 per square foot when prevailing wage and apprenticeship requirements are met.
- $1.19For tax years beginning in 2026, the IRS lists a base maximum of $0.59 to $1.19 per square foot, or $2.97 to $5.94 per square foot when prevailing wage and apprenticeship requirements are met.
- $2.97For tax years beginning in 2026, the IRS lists a base maximum of $0.59 to $1.19 per square foot, or $2.97 to $5.94 per square foot when prevailing wage and apprenticeship requirements are met.
- $5.94For tax years beginning in 2026, the IRS lists a base maximum of $0.59 to $1.19 per square foot, or $2.97 to $5.94 per square foot when prevailing wage and apprenticeship requirements are met.
Section 179D lets building owners (and, in some cases, designers of property for certain tax-exempt owners) deduct the cost of qualifying energy-efficient commercial building property or retrofit property. Public Law 119-21, which the IRS also describes in its One Big Beautiful Bill energy FAQs, terminates that deduction for any property the construction of which begins after June 30, 2026. If construction begins on or before June 30, 2026, the deduction rules can still apply when the property is placed in service. For tax years beginning in 2026, the IRS lists a base maximum of $0.59 to $1.19 per square foot, or $2.97 to $5.94 per square foot when prevailing wage and apprenticeship requirements are met.
Last checked: November 5, 2026. This page explains the rules only. It is general information, not legal, tax, or financial advice.
The short version
- New construction that starts after June 30, 2026 does not qualify for 179D.
- Construction that begins on or before June 30, 2026 can still support a deduction later, when the property is placed in service, if the other 179D tests are met.
- Qualifying property is generally installed as part of interior lighting, HVAC and hot water systems, or the building envelope on a U.S. commercial building in scope of the applicable ASHRAE Standard 90.1 reference.
- Energy-efficient commercial building property must be part of a plan certified to cut annual energy and power costs for those systems by at least the statutory threshold versus a reference building.
- Retrofit property has extra rules, including that the building was originally placed in service at least five years before the qualified retrofit plan.
- Claim the deduction on Form 7205.
Who qualifies
- Owners of qualified commercial buildings that place qualifying property in service, when construction of that property began on or before June 30, 2026.
- Designers of qualifying property installed in buildings owned by specified tax-exempt entities (certain government entities, Indian tribal governments, Alaska Native Corporations, and other tax-exempt organizations), subject to allocation rules.
- Property must be depreciable or amortizable and installed as part of interior lighting, heating, cooling, ventilation and hot water systems, or the building envelope.
- Certification and ASHRAE reference-standard rules apply; which ASHRAE edition applies depends on when construction began and when the property is placed in service.
How much can you deduct in 2026
For property placed in service in 2023 or later, with construction beginning on or before June 30, 2026, the deduction is generally the lesser of the cost of the installed property or a maximum amount per square foot that rises with certified energy savings. The IRS table for tax year 2026 shows a base range of $0.59 to $1.19 per square foot, and $2.97 to $5.94 per square foot when prevailing wage and apprenticeship requirements are met. Deductions claimed for the same building in the prior three years (four years for an allocated deduction) reduce the remaining maximum before you compute the current year.
How to get it
How to claim
- Confirm construction of the property began on or before June 30, 2026. If it began later, 179D does not apply.
- Confirm the building and systems are in scope and that a qualified professional will certify the required energy savings against the correct ASHRAE Standard 90.1 reference.
- Track whether prevailing wage and apprenticeship rules were met if you are aiming for the higher per-square-foot maximum.
- Subtract any section 179D amounts claimed for the building in the lookback window the instructions require.
- Complete Form 7205, Energy Efficient Commercial Buildings Deduction, and report the deduction on your return as the form and instructions direct.
- Keep the certification, cost records, and square-footage support with your tax files.
Programs that may match
Look beyond 179D
FAQ
FAQ
Can I still claim 179D if construction starts in July 2026?
No. The IRS says the deduction is not allowed for property the construction of which begins after June 30, 2026.
What if construction began in May 2026 but the building is finished in 2027?
Construction beginning on or before June 30, 2026 can still support a 179D deduction when the property is placed in service, if the energy-savings, certification, and other section 179D requirements are met. Which ASHRAE reference standard applies can depend on the placed-in-service date.
How much is the 179D deduction per square foot in 2026?
For tax years beginning in 2026, the IRS lists a base maximum of $0.59 per square foot at 25% energy savings, increasing to $1.19 per square foot at higher savings, and $2.97 to $5.94 per square foot when prevailing wage and apprenticeship requirements are met. The deduction cannot exceed the cost of the installed property.
Who can claim 179D?
Building owners that place qualifying property in service, and designers of qualifying property installed in buildings owned by specified tax-exempt entities, when construction began on or before June 30, 2026 and the other rules are met.
What building systems qualify?
Property installed as part of interior lighting systems; heating, cooling, ventilation, and hot water systems; or the building envelope, on a U.S. building within the scope of the applicable ASHRAE Standard 90.1 reference, with the required certification.
Which form do I file?
Use Form 7205, Energy Efficient Commercial Buildings Deduction, and follow the current Instructions for Form 7205 for rates, certification, and reporting.